Breaking the Eskom monopoly is central to solving our electricity crisis

Note to editors: The following speech was delivered in Parliament by the DA's Shadow Minister of Energy, Lance Greyling MP, during the SONA Debate on Thursday afternoon, February 18 2015. 

Honourable President, the scenes that we witnessed in this Parliament last week were despicable and have shamed our great nation and this institution that we care so greatly for. Unfortunately this has been a long time coming, as I have watched over the last 11 years as a Member of this House the gradual erosion of Parliament's authority and the undermining of the role it plays as the custodian of our hard-won democracy.

The ruling party believes that the best way to ensure the flow of electrons in our electricity sector is by exerting complete State control over it. The State utility Eskom enjoys a vertically integrated monopoly in that it accounts for over 95 percent of electricity generation, it owns and operates the entire transmission grid and it distributes final power to over 42 percent of consumers in the country. Added to this State control is the Ministry of Energy that solely gets to determine what energy generation capacity is built, and who ultimately ends up building it.

This crisis is not merely an inconvenience as you stated last week Honourable President, but a dire threat to our economic growth prospects and will make a mockery of any attempts for us to deal with our challenge of overcoming poverty, creating jobs and reducing inequality.

Instead of the ANC's philosophy of control and coercion of the electricity sector, the DA believes that the best way to overcome this crisis is through entrenching the twin principles of competition and cooperation. The power of competition has been shown through the one successful energy programme of the government, namely the Renewable Energy Independent Power Producers Programme.

This programme has seen prices drop by as much as 65 percent over the three bidding windows, and many of the projects were implemented in the space of just over a year and funded solely through the private sector. As the latest CSIR report has shown, this programme has in fact saved Eskom R1 billion that it otherwise would have had to spend on diesel generation. This is the power of private sector competition, Honourable President, and it needs to be extended to all areas of our electricity sector.

In order for this to be truly successful however, the second principle of cooperation also needs to be enshrined. This requires more than just calling on the private sector to help deal with a government induced electricity crisis, but a complete institutional restructuring of the sector so that all actors in our society can have the confidence that their initiatives will be rewarded and that they have a level playing field to compete on.

The DA believes that we urgently need consensus on an end state vision for this sector and for legislation like the ISMO Bill, which will take the grid away from Eskom, to finally be implemented. It also requires a greater role for large municipalities to use their own balance sheets to secure power purchase agreements with Independent Power Producers.

It is the concern of the DA however, that the ANC will not abandon its ideology of control and coercion in the energy sector, because it wants to ensure that it can take a slice of these large financial investments into our energy sector. We saw this in the case of Hitachi Power Africa, where the ANC made a cool R50 million profit through a company that is directly responsible for the delays in the building of Medupi power station. We can also evidence it in the latest agreement signed with Russia over the nuclear build programme that Russia proudly displays on its website while our government refuses to show it to us.

I never thought Russia would be more transparent than South Africa, but such is the extent of the ANC's ideology of control and coercion. It also shows that Russia is proud of the agreement in that it gives them all the benefits while we take on all the risk of this R1 trillion project.

Ultimately the voters now have a stark choice between the ANC's control and coercion philosophy which has caused this electricity crisis, or the DA's approach of competition and cooperation that can finally lead our country to the true prosperity that it deserves.

Issued by the DA, February 18 2015

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